United Bank Limited

UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2014
(UNAUDITED)

D DI IR RE EC CT TO OR RS S R RE EP PO OR RT T T TO O T TH HE E M ME EM MB BE ER RS S

On behalf of the Board of Directors, I am pleased to present to you the financial statements of UBL for
the quarter ended March 31, 2014.

Performance Highlights

Unconsolidated Profit after Tax for the quarter ended March 31, 2014 stands at Rs 5.2 billion, a
growth of 32% over the quarter ended March 31, 2013.
Net interest margin at 5.1% remains under pressure due to the increase in the minimum rate
payable on savings accounts.
Active recovery efforts and diligent portfolio management have resulted in a further 3%
reduction in gross NPLs and a 58% reduction in the provision charge compared to Q113.

Financial Highlights
Overall performance
For the quarter ended March 31, 2014, UBL has achieved
a profit after tax of Rs 5.2 billion. This is 32% higher than
the corresponding period last year and translates into
earnings per share of Rs. 4.26 (March 2013: Rs. 3.23).

For the same period, UBLs profit before tax is Rs 7.8
billion, which is 33% higher than the corresponding
period last year. This has been achieved through
consistent growth in the balance sheet, enhancement in
non-markup based income and contained provisions. On
a consolidated basis, UBL achieved a profit after tax of Rs
5.5 billion, an increase of 12% over the first quarter of
2013.

Net Interest Income
Net Interest Income has grown by 12% from Rs 8.8 billion
in Q113 to Rs 9.8 billion in Q114 as the average balance
sheet grew by 15% and interest rates increased by 100
bps during the last quarter of 2013. Margins however,
remain impacted by the linking of the minimum savings
rate to repo rates. Despite the higher rate environment
and a 170 bps increase in the savings rate as a result of
various regulatory changes over the last year, growth in
the cost of domestic deposits was contained to 59 bps in
comparison to Q113, through a consistent and stable
growth in core deposits.



2
Non-Interest Income
Non-interest income maintains its contribution as a core revenue component and has posted strong YoY
growth of 32% in Q114 to reach Rs 5.1 billion. Fees and Commissions remained the dominant revenue
source and increased by 15% to Rs 2.7 billion. These continued to be driven by growth in revenues from
market leading positions in Home remittances and Omni, along with enhanced earnings on trade flows.
Treasury and Capital Markets activity continued to post strong results with double digit growth across all
business lines. Timely leveraging of opportunities in a volatile market resulted in a 66% increase in
foreign exchange income over the previous year, while income from investments in the growing equity
markets resulted in a 66% increase, through capital gains and dividends.

Provisions and loan losses

The focus towards improving asset quality through active restructuring and recovery efforts continues to
provide good results as non-performing loans have further decreased by 3% in 2014, following the 8%
reduction in 2013. The aggregate provisions for the first quarter of 2014 are 58% lower than the
corresponding period last year driven by recoveries in both the domestic and international businesses.
The Bank remains well reserved with the coverage ratio improving from 84% in December 2013 to 86%
in March 2014.
Cost management
Administrative expenses of Rs 6.7 billion are 8% higher than the corresponding period last year, but have
reduced by 2% over the prior quarter. Despite business and volume growth, the increase in
administrative expenses has been contained to below inflation levels. The overall cost to income ratio
has improved to 45% in Q114 in comparison to 49% in Q113.
Balance Sheet
The overall balance sheet grew by 2% in the first quarter of 2014. The Banks focus on building the stable
core deposit base of the Bank is yielding good results as these increased by 4%, well ahead of market
growth. The mobilization of low cost deposits has gathered momentum with average low cost deposits
increasing by 18% over the corresponding quarter of last year. Advances reduced from Rs 391 billion in
December 2013 to Rs 377 billion as a result of repayments of seasonal financing, and the ADR improved
further to 48%.
Capital Ratios
The Tier 1 Capital Adequacy Ratio (CAR) of the Bank was 9.8 % as at March 31, 2014, marginally lower
than 10.0% as at December 31, 2013, primarily as a result of the 2013 Final dividend payout in the
current quarter. The overall CAR of the Bank remains strong at 12.8%, comfortably above minimum
required levels.


3
The Board of Directors of UBL declared an interim dividend of 25% (Rs 2.5 per share) in their meeting in
Islamabad on 18 April 2014, along with the results for the quarter ended March 31, 2014.

Key Developments
Macroeconomic performance
Pakistans macroeconomic indicators have shown improvement across all fronts. Inflation has remained
under control in the 9M FY 14 averaging 8.6% and Large Scale Manufacturing has grown by 6.1% during
7M FY14. The World Bank has recently revised their forecast for GDP growth upwards to 4%. The fiscal
deficit has been contained with provisional estimates of 3.1% of GDP during the first nine months of the
fiscal year. Most importantly, this year has seen a significant improvement in the foreign exchange
reserves position and a consequent appreciation of the Rupee. While these are all encouraging
developments, the recovery is still nascent and sustained policy efforts are critical to build on the
positive economic climate.
The countrys balance of payment position, which had remained precarious during most of 2013, has
seen a significant turnaround. The receipt of foreign assistance of US$ 1.5 billion during the quarter,
along with the release of Coalition Support Fund (CSF) proceeds have provided a significant boost to the
previously fast depleting reserves position which strengthened to above US$ 5 billion by the end of
March 2014. This sizeable inflow and the restored market confidence have led to a 6.5% appreciation in
the Rupee during the first quarter of 2014.
The trade deficit for 9M FY14 has narrowed by 5.5% in comparison to 9M FY13, as exports have
increased by 6.1%, while import growth has been contained to 0.9%. However, due to relatively lower
proceeds from the CSF this year, the current account witnessed a higher deficit of US$ 2 billion as against
US$ 831 million during the same period last year. Workers remittances continued to grow and provide
strong support to the external account, increasing by 11.9% during 9M FY14 to reach US$ 11.6 billion.
Although fiscal imbalances remain structural and concerning, the newly elected government is targeting
a reduced budget deficit of 5.8% for FY14 in comparison to the 8.0% in FY13. This is being addressed
with measures to lower PSDP spending along with higher tax and non-tax revenue collection. FBRs tax
collection has improved with a 16% growth during the first nine months of FY14, though this may still not
be sufficient to meet even the revised revenue collection target of PKR 2,345 billion. In line with
performance targets required under the Extended Fund Facility with the IMF, the government has
recently shifted a large component of its borrowing from the SBP to banks through a record PIB auction
in Q1, 2014. While this will result in an increase in debt servicing cost going forward, the size of the
auction is reflective of the greatly improved market sentiment.
After exhibiting a record performance in 2013 with a 49% return, the local stock market continued to
perform strongly during Q1 14, with the KSE-100 index appreciating by 7.5%. Foreigners remained net


4
investors in the market during the quarter while average daily traded value increased significantly over
the previous quarter.
The level of inflation has remained well controlled during the 9M of FY14 averaging 8.6%, along with a
gradually improving external account position and appreciation of the rupee during the first quarter of
2014. Despite improved indicators, the State Bank of Pakistan has kept the discount rate unchanged at
10.0% in 2014. It is envisaged that the key determinants for monetary policy during the year would be
the sustainability of the positive developments around the external account and the continued
containment of inflation.
Deposits for the banking sector grew marginally by 0.6% during the first quarter of 2014, while lending
growth has slowed to 0.7% after a strong performance during the previous quarter. Non-performing
loans for the industry continued to decline and stood at Rs 585 billion as at December 2013 reflecting an
improvement of 3.1% over the previous quarter.
UBL International
The positive sentiments developed in the GCC region since 2013 are gaining momentum. UAE continues
to spearhead growth with upswing in the trade, services and real estate sectors and as Dubai gears up
for Expo 2020. In Qatar, strong performance from sectors in addition to oil and gas has helped diversify
the economy and post above expected GDP growth.
UBL International plans to benefit from the improving conditions with increased emphasis on wholesale
banking, and a healthy pipeline has been developed which will lead to the acquisition of quality
corporate assets in the coming quarters. Cross-sell focus continued to drive higher fee income through
substantial increase in trade volumes. While attaining an optimal funding profile, liquidity ratios
remained strong across all territories. Going forward, the business will further strengthen its
underwriting scale and quality while maintaining the focus on recoveries.
UBL Omni
As mobile / branchless banking continues to gain acceptance, UBL Omni remains in the forefront and,
during the quarter, expanded its agent network to over 14,500 Dukaans, covering over 800 towns and
cities. The instantaneous ATM / Debit cards remain popular with customers and 45,000 new accounts
were opened during the quarter while transaction volumes and value increased by 12% and 11%
respectively over the previous quarter.
As a result of its continued leadership in G2P payments, UBL Omni is privileged to have been selected to
provide aid disbursement services to over 50,000 drought and famine affected families of Thar, Sindh. In
line with the objective of diversifying business lines and increasing usage of the Omni platform across
industries, the business added new Cash Management clients for microfinance loan disbursements /


5
collections, school fee collections, and salary disbursement services.
Internationally, the UBL Omni technology platform has been launched for UBL UK to introduce merchant
based remittance services to Pakistan. This service, the first of its kind being offered by a UK regulated
bank, enables walk-in customers in the UK to efficiently transfer money from an authorized retail agent
to recipients in Pakistan on a real time basis.
Core banking system implementation (CBS)
In 2013, all conventional branches and the liability operations of Islamic Banking Branches were
successfully migrated to CBS. To enhance coverage of the Islamic Banking product suite, certain Islamic
asset products have also been migrated to CBS in the first quarter of 2014. The roll out of CBS within the
UAE operations is currently underway and is targeted for completion in 2014. This will be followed by the
implementation of CBS at other international branches.
In order to streamline the loan booking process for corporate loans the roll out of an upgraded Loan
Origination System (LOS) is under progress and is planned for completion in 2014. One component of
this functionality has already been released to users during the first quarter of this year. In order to
strengthen the operating and control environment, the development of a Fraud Risk Management
system is also planned for 2014. New modules aimed at improving service quality are also under
development and are expected to be launched starting from the next quarter.

Corporate Social Responsibility
Building on the initiatives taken in the preceding year, UBL continued to invest over Rs 21 million in the
community under its CSR mandate, by providing charitable assistance to new organizations along with
contributions towards long-standing partnerships. While the majority of donations during the quarter
were targeted at education, contributions were also made to organizations in the healthcare sector and
to those that assist disadvantaged members of society in becoming economically self-sufficient.
Looking ahead
While many of the key indicators have improved, the platform provided by recent positive developments
needs to be built on through structural improvements to continue strengthening the countrys
macroeconomic position. The external account has shown some respite during the quarter and this will
be further boosted by the recent success of Pakistans Eurobond issue which, despite a gap of several
years, was heavily oversubscribed. The privatization process has now gathered momentum as three
capital markets transactions have been announced for closure during the current fiscal year. Material
flows are also expected in the near future from the auction of 3G licenses, further flows from
multilateral donor agencies, and continued privatization of state owned entities. These will provide the
needed space to undertake several reforms, most notably on the fiscal front where achieving revenue


6
targets remains a persistent challenge.
Banking sector spreads are expected to remain under pressure in 2014. However, the positive
macroeconomic developments are expected to lead to a revival of private sector credit which should
improve the overall earnings profile.
UBL will continue to invest in its core businesses to maintain its competitive advantage in technology
driven innovation. Growth within the corporate and commercial segments is expected, but will be driven
by asset quality considerations in order to strengthen portfolio performance. The restructuring and
recovery of non-performing loans remains a priority along with aggressively pursuing settlements. The
expanded branch network has started delivering to its potential and focus will now be on deepening the
core deposit base along with a renewed emphasis on service quality to strengthen customer
relationships.

Acknowledgements
We would like to express our sincere thanks and gratitude to our customers for their patronage and to
the State Bank of Pakistan and the Government of Pakistan for their continued support. We also take
this opportunity to thank the shareholders for their continued trust and the staff for their dedication and
commitment.

For and on behalf of the Board,





Sir Mohammed Anwar Pervez, OBE, HPk
Chairman

Islamabad
April 18, 2014
UNCONSOLIDATED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION
AS AT MARCH 31, 2014
Note (Un-audited) (Audited)
March 31,
2014
December 31,
2013
ASSETS
Cash and balances with treasury banks 84,774,704 88,520,725
Balances with other banks 14,223,260 25,867,497
Lendings to financial institutions 6 17,154,879 28,835,115
Investments 7 483,820,409 423,777,250
Advances 8 377,057,444 390,813,462
Operating fixed assets 9 24,217,590 24,607,937
Deferred tax asset - net - -
Other assets 29,529,731 27,338,719
1,030,778,017 1,009,760,705
LIABILITIES
Bills payable 9,552,252 16,590,884
Borrowings 10 43,593,588 40,573,874
Deposits and other accounts 11 846,680,006 827,847,738
Subordinated loans 332,660 665,328
Liabilities against assets subject to finance lease - -
Deferred tax liability - net 1,802,274 1,087,240
Other liabilities 28,785,831 22,081,644
930,746,611 908,846,708
NET ASSETS 100,031,406 100,913,997
REPRESENTED BY:
Share capital 12,241,798 12,241,798
Reserves 31,738,875 33,681,210
Unappropriated profit 42,442,965 42,634,545
86,423,638 88,557,553
Surplus on revaluation of assets - net of deferred tax 12 13,607,768 12,356,444
100,031,406 100,913,997
CONTINGENCIES AND COMMITMENTS 13
Atif R. Bokhari Amin Uddin Seerat Asghar Sir Mohammed Anwar Pervez, OBE, HPk
President & Director Director Chairman
Chief Executive Officer
--------------(Rupees in '000)-------------
The annexed notes from 1 to 22 form an integral part of these unconsolidated condensed interim financial
statements.
7
UNCONSOLIDATED CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2014
Note
March 31, 2014 March 31, 2013
Mark-up / return / interest earned 14 19,394,031 17,005,878
Mark-up / return / interest expensed 15 (9,580,200) (8,218,114)
Net mark-up / return / interest income 9,813,831 8,787,764
Provision against loans and advances - net (146,947) (419,155)
Reversal of provision against lendings to financial institutions - net 338 4,338
Reversal / (provision) for diminution in value of investments - net 5,578 (13,220)
Bad debts written off directly (43,730) (44,691)
(184,761) (472,728)
Net mark-up / return / interest income after provisions 9,629,070 8,315,036
Non mark-up / interest income
Fee, commission and brokerage income 2,703,171 2,344,275
Dividend income 674,592 548,856
Income from dealing in foreign currencies 654,435 394,018
Gain on sale of securities - net 783,002 393,011
Unrealized (loss) / gain on revaluation of investments
classified as held for trading (46,728) 6,222
Other income 305,315 168,191
Total non mark-up / interest income 5,073,787 3,854,573
14,702,857 12,169,609
Non mark-up / interest expenses
Administrative expenses 16 (6,720,293) (6,194,632)
Other provisions - net (13,522) (3,954)
Workers' Welfare Fund (156,876) (116,523)
Other charges (151) (299)
Total non mark-up / interest expenses (6,890,842) (6,315,408)
Profit before taxation 7,812,015 5,854,201
Taxation - Current (2,670,060) (1,924,554)
- Deferred 67,520 24,188
(2,602,540) (1,900,366)
Profit after taxation 5,209,475 3,953,835
Earnings per share - basic and diluted 4.26 3.23
Atif R. Bokhari Amin Uddin Seerat Asghar Sir Mohammed Anwar Pervez, OBE, HPk
President & Director Director Chairman
Chief Executive Officer
---------------------------------------- (Rupees in '000) ----------------------------------------
-------------------------------------------- (Rupees) --------------------------------------------
The annexed notes from 1 to 22 form an integral part of these unconsolidated condensed interim financial
statements.
UNCONSOLIDATED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2014
March 31,
2014
March 31,
2013
Profit after taxation 5,209,475 3,953,835
Other comprehensive income:
Items that will never be reclassified to profit and loss account - -
Items that are or may be reclassified to profit and loss account
Exchange differences on translation of
net investment in foreign branches (2,466,508) 426,551
Amortization of cash flow hedges 4,962 10,786
Related deferred tax charge (1,737) (3,775)
3,225 7,011
(2,463,283) 433,562
Comprehensive income transferred to equity - net of tax 2,746,192 4,387,397
Atif R. Bokhari Amin Uddin Seerat Asghar Sir Mohammed Anwar Pervez, OBE, HPk
President & Director Director Chairman
Chief Executive Officer
Surplus arising on revaluation of assets has been reported in accordance with the requirements of the Companies
Ordinance, 1984 and the directives of the State Bank of Pakistan in a separate account below equity.
------------------------------------ (Rupees in '000) ------------------------------------
The annexed notes from 1 to 22 form an integral part of these unconsolidated condensed interim financial
statements.
UNCONSOLIDATED CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2014
March 31,
2014
March 31,
2013
CASH FLOW FROM OPERATING ACTIVITIES
Profit before taxation 7,812,015 5,854,201
Less: Dividend income (674,592) (548,856)
7,137,423 5,305,345
Adjustments:
Depreciation 400,544 399,230
Amortization 99,562 102,983
Workers' Welfare Fund 156,876 116,523
Provision for retirement benefits 239,251 159,730
Provision against loans and advances - net 146,947 419,155
Reversal of provision against lendings to financial institutions - net (338) (4,338)
(Reversal) / provision for diminution in value of investments - net (5,578) 13,220
Gain on sale of operating fixed assets (30,330) (3,469)
Amortization of cash flow hedges 4,962 10,786
Unrealized loss / (gain) on revaluation of investments classified as held for trading 46,728 (6,222)
Bad debts written-off directly 43,730 44,691
Provision against other assets 13,522 3,954
1,115,876 1,256,243
8,253,299 6,561,588
(Increase) / decrease in operating assets
Lendings to financial institutions 11,680,574 (1,169,585)
Held for trading securities (46,324,636) (1,914,165)
Advances 13,565,341 11,845,540
Other assets - (excluding advance taxation) (2,165,667) 4,574,582
(23,244,388) 13,336,372
Increase / (decrease) in operating liabilities
Bills payable (7,038,632) 6,801,050
Borrowings 3,019,714 30,608,951
Deposits and other accounts 18,832,268 4,559,182
Other liabilities (excluding current taxation) 1,810,341 (1,601,759)
16,623,691 40,367,424
1,632,602 60,265,384
Payments on account of staff retirement benefits (514,301) (203,349)
Income taxes paid (2,059,023) (2,662,189)
Net cash (outflow) / inflow from operating activities (940,722) 57,399,846
CASH FLOW FROM INVESTING ACTIVITIES
Net investment in securities (11,808,229) (61,976,352)
Dividend income received 277,017 162,913
Investment in operating fixed assets (436,450) (693,730)
Sale proceeds from disposal of operating fixed assets 329,193 32,535
Net cash outflow from investing activities (11,638,469) (62,474,634)
CASH FLOW FROM FINANCING ACTIVITIES
Repayments of subordinated loans (332,668) (2,333,268)
Dividends paid (11,891) -
Net cash outflow from financing activities (344,559) (2,333,268)
(12,923,750) (7,408,056)
Exchange differences on translation of net investment in foreign branches (2,466,508) 426,551
Decrease in cash and cash equivalents during the period (15,390,258) (6,981,505)
Cash and cash equivalents at beginning of the period 114,388,222 109,395,772
Cash and cash equivalents at end of the period 98,997,964 102,414,267
Atif R. Bokhari Amin Uddin Seerat Asghar Sir Mohammed Anwar Pervez, OBE, HPk
President & Director Director Chairman
Chief Executive Officer
-----------(Rupees in '000)-----------
The annexed notes from 1 to 22 form an integral part of these unconsolidated condensed interim financial statements.
UNCONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2014
Exchange
translation
reserve
Cash flow
hedge
reserve
Balance as at January 01, 2013 (Audited) - Restated 12,241,798 17,797,537 11,267,676 (20,994) 37,415,599 78,701,616
Transactions with owners for the quarter ended March 31, 2013
Final cash dividend - December 31, 2012 declared
subsequent to the year end at Rs.3.5 per share - - - - (4,284,629) (4,284,629)
Total comprehensive income for the quarter ended
March 31, 2013
Profit after taxation for the quarter ended March 31, 2013 - - - - 3,953,835 3,953,835
Other comprehensive income - net of tax - - 426,551 7,011 - 433,562
Total comprehensive income for the quarter ended March 31, 2013 - - 426,551 7,011 3,953,835 4,387,397
Transfer from surplus on revaluation of fixed assets
to unappropriated profit - net of tax - - - - 16,758 16,758
Transfer to statutory reserve - 395,384 - - (395,384) -
Balance as at March 31, 2013 (Un-audited) 12,241,798 18,192,921 11,694,227 (13,983) 36,706,179 78,821,142
Transactions with owners for the nine months ended
December 31, 2013
Interim cash dividend - March 31, 2013 declared
at Rs.2.0 per share - - - - (2,448,360) (2,448,360)
Interim cash dividend - June 30, 2013 declared
at Rs.2.0 per share - - - - (2,448,360) (2,448,360)
Interim cash dividend - September 30, 2013 declared
at Rs.2.0 per share - - - - (2,448,360) (2,448,360)
- - - - (7,345,080) (7,345,080)
Total comprehensive income for the nine months ended
December 31, 2013
Profit after taxation for the nine months ended December 31, 2013 - - - - 14,660,120 14,660,120
Other comprehensive income - net of tax - - 2,331,275 10,758 28,998 2,371,031
Total comprehensive income for the nine months ended December 31, 2013 - - 2,331,275 10,758 14,689,118 17,031,151
Transfer from surplus on revaluation of fixed assets
to unappropriated profit - net of tax - - - - 50,340 50,340
Transfer to statutory reserve - 1,466,012 - - (1,466,012) -
Balance as at December 31, 2013 (Audited) 12,241,798 19,658,933 14,025,502 (3,225) 42,634,545 88,557,553
Transactions with owners for the quarter ended March 31, 2014
Final cash dividend - December 31, 2013 declared
subsequent to the year end at Rs. 4.0 per share - - - - (4,896,719) (4,896,719)
Total comprehensive income for the quarter ended
March 31, 2014
Profit after taxation for the quarter ended March 31, 2014 - - - - 5,209,475 5,209,475
Other comprehensive income - net of tax - - (2,466,508) 3,225 - (2,463,283)
Total comprehensive income for the quarter ended March 31, 2014 - - (2,466,508) 3,225 5,209,475 2,746,192
Transfer from surplus on revaluation of fixed assets
to unappropriated profit - net of tax - - - 16,612 16,612
Transfer to statutory reserve - 520,948 - - (520,948) -
Balance as at March 31, 2014 (Un-audited) 12,241,798 20,179,881 11,558,994 - 42,442,965 86,423,638
The annexed notes from 1 to 22 form an integral part of these unconsolidated condensed interim financial statements.
Atif R. Bokhari Amin Uddin Seerat Asghar Sir Mohammed Anwar Pervez, OBE, HPk
President & Director Director Chairman
Chief Executive Officer
--------------------------------------------------(Rupees in '000)---------------------------------------------------
Share
capital
Unapprop-
riated profit
Total Statutory
reserve
Capital reserves
NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2014
1. STATUS AND NATURE OF BUSINESS
2. BASIS OF PRESENTATION
3. STATEMENT OF COMPLIANCE
3.1
3.2
3.3
United Bank Limited (the Bank) is a banking company incorporated in Pakistan and is engaged in commercial banking and
related services. The Bank's registered office and principal office are situated at UBL Building, Jinnah Avenue, Blue Area,
Islamabad and at State Life Building No. 1, I. I. Chundrigar Road, Karachi respectively. The Bank operates 1,281 (December 31,
2013: 1,283) branches inside Pakistan including 22 (December 31, 2013: 22) Islamic Banking branches and 1 (December 31,
2013: 1) branch in Karachi Export Processing Zone. The Bank also operates 18 (December 31, 2013:18) branches outside
Pakistan as at March 31, 2014. The Bank is a subsidiary of Bestway (Holdings) Limited which is incorporated in the United
Kingdom.
The Bank's ordinary shares are listed on all three stock exchanges in Pakistan. Its Global Depository Receipts (GDRs) are on the
list of the UK Listing Authority and the London Stock Exchange Professional Securities Market. These GDRs are also eligible for
trading on the International Order Book System of the London Stock Exchange. Further, the GDRs constitute an offering in the
United States only to qualified institutional buyers in reliance on Rule 144A under the US Securities Act of 1933 and an offering
outside the United States in reliance on Regulation S.
In accordance with the directives of the Federal Government regarding the shifting of the banking system to Islamic modes, the
State Bank of Pakistan (SBP) has issued various circulars from time to time. Permissible forms of trade-related modes of
financing include purchase of goods by banks from their customers and immediate resale to them at appropriate mark-up in price
on deferred payment basis. The purchases and sales arising under these arrangements are not reflected in these unconsolidated
condensed interim financial statements as such, but are restricted to the amount of facility actually utilized and the appropriate
portion of mark-up thereon. The Islamic Banking branches of the Bank have complied with the requirements set out under the
Islamic Financial Accounting Standards issued by the Institute of Chartered Accountants of Pakistan and notified under the
provisions of the Companies Ordinance, 1984.
The financial results of the Islamic Banking branches of the Bank have been included in these unconsolidated condensed interim
financial statements for reporting purposes, after eliminating material inter-branch transactions / balances. Key financial figures of
the Islamic Banking branches are disclosed in note 20 to these unconsolidated condensed interim financial statements.
The SBP vide BSD Circular letter No. 10, dated August 26, 2002 has deferred the applicability of International Accounting
Standard 39, Financial Instruments: Recognition and Measurement and International Accounting Standard 40, Investment
Property for banking companies till further instructions. Further, according to the notification of the SECP issued vide SRO
411(I)/2008 dated April 28, 2008, International Financial Reporting Standard (IFRS) 7, Financial Instruments: Disclosures has not
been made applicable for banks. Accordingly, the requirements of these standards have not been considered in the preparation
of these unconsolidated condensed interim financial statements. However, investments have been classified and valued in
accordance with the requirements of various circulars issued by the SBP.
These unconsolidated condensed interim financial statements of the Bank have been prepared in accordance with the
requirements of International Accounting Standard (IAS) 34, Interim Financial Reporting, Islamic Financial Accounting Standards
(IFAS) issued by the Institute of Chartered Accountants of Pakistan, the requirements of the Companies Ordinance, 1984, the
Banking Companies Ordinance,1962 and directives issued by the Securities and Exchange Commission of Pakistan (SECP) and
the SBP. In case requirements differ, the requirements of the Companies Ordinance, 1984, the Banking Companies Ordinance,
1962 and the said directives have been followed.
The disclosures made in these unconsolidated condensed interim financial statements have been limited based on a format
prescribed by the SBP vide BSD Circular Letter No. 2 dated May 12, 2004 and IAS 34, Interim Financial Reporting. They do not
include all the disclosures required for annual financial statements, and these unconsolidated condensed interim financial
statements should be read in conjunction with the unconsolidated financial statements of the Bank for the year ended December
31, 2013.
NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2014
3.4
4. SIGNIFICANT ACCOUNTING POLICIES AND FINANCIAL RISK MANAGEMENT
4.1
4.2
5. BASIS OF MEASUREMENT
5.1
5.2
(Un-audited) (Audited)
March 31,
2014
December 31,
2013
6. LENDINGS TO FINANCIAL INSTITUTIONS
Call money lendings 200,000 100,000
Repurchase agreement lendings 1,200,000 13,791,125
Other lendings to financial institutions 16,375,476 15,597,908
17,775,476 29,489,033
Provision against lendings to financial institutions (620,597) (653,918)
17,154,879 28,835,115
These unconsolidated condensed interim financial statements represent the separate condensed interim financial statements of the
Bank. The consolidated condensed interim financial statements of the Bank and its subsidiary companies are presented separately.
------------(Rupees in '000)------------
The accounting policies adopted in the preparation of these unconsolidated condensed interim financial statements are consistent with
those applied in the preparation of the unconsolidated financial statements of the Bank for the year ended December 31, 2013.
The financial risk management objectives and policies are consistent with those disclosed in the financial statements of the Bank for
the year ended December 31, 2013.
These unconsolidated condensed interim financial statements have been prepared under the historical cost convention except that
certain operating fixed assets have been stated at revalued amounts and certain investments and derivative financial instruments
have been stated at fair value.
The preparation of these unconsolidated condensed interim financial statements in conformity with approved accounting standards
requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and
income and expenses. It also requires management to exercise judgment in the application of its accounting policies. The estimates
and assumptions are based on historical experience and various other factors that are believed to be reasonable under the
circumstances. These estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of revision and future
periods if the revision affects both current and future periods.
The significant judgments made by management in applying its accounting policies and the key sources of estimation uncertainty were
the same as those applied to the unconsolidated financial statements of the Bank for the year ended December 31, 2013.
NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2014
7. INVESTMENTS
7.1 Investments by type
Held by Bank Given as
collateral
Total Held by Bank Given as
collateral
Total
Held for trading securities
Market Treasury Bills 51,508,889 - 51,508,889 7,401,965 - 7,401,965
Pakistan Investment Bonds 1,066,483 - 1,066,483 - - -
Ordinary shares of listed companies 1,462,772 - 1,462,772 317,933 - 317,933
54,038,144 - 54,038,144 7,719,898 - 7,719,898
Available for sale securities
Market Treasury Bills 103,430,001 212,564 103,642,565 176,092,538 12,054,264 188,146,802
Pakistan Investment Bonds 119,946,454 17,205,580 137,152,034 65,136,963 - 65,136,963
Government of Pakistan Sukuk 5,185,000 - 5,185,000 6,186,752 - 6,186,752
Government of Pakistan Eurobonds 10,293,098 - 10,293,098 10,934,926 - 10,934,926
Ordinary shares of listed companies 14,850,460 - 14,850,460 14,157,209 - 14,157,209
Preference shares 414,821 - 414,821 436,645 - 436,645
Ordinary shares of unlisted companies 242,956 - 242,956 243,100 - 243,100
Term Finance Certificates 1,920,637 - 1,920,637 1,921,367 - 1,921,367
Foreign bonds - sovereign 12,311,349 - 12,311,349 13,388,237 - 13,388,237
Foreign bonds - others 10,773,280 - 10,773,280 11,557,116 - 11,557,116
279,368,056 17,418,144 296,786,200 300,054,853 12,054,264 312,109,117
Held to maturity securities
Market Treasury Bills 47,608,793 - 47,608,793 40,607,486 - 40,607,486
Pakistan Investment Bonds 57,068,557 - 57,068,557 38,333,967 - 38,333,967
Government of Pakistan Eurobonds 4,956,154 - 4,956,154 5,281,493 - 5,281,493
Government of Pakistan Sukuk - - - 300,000 - 300,000
Term Finance Certificates 5,007,817 - 5,007,817 5,045,801 - 5,045,801
Sukuks 1,720,506 - 1,720,506 1,774,197 - 1,774,197
Participation Term Certificates 4,939 - 4,939 4,939 - 4,939
Debentures 2,266 - 2,266 2,266 - 2,266
Foreign bonds 213,717 - 213,717 228,454 - 228,454
Recovery note 303,697 - 303,697 324,639 - 324,639
CDC SAARC Fund 214 - 214 229 - 229
116,886,660 - 116,886,660 91,903,471 - 91,903,471
Associates
United Growth and Income Fund 3,030,136 - 3,030,136 3,030,136 - 3,030,136
UBL Liquidity Plus Fund 1,335,378 - 1,335,378 335,378 - 335,378
Al-Ameen Islamic Income Fund 200,000 - 200,000 200,000 - 200,000
UBL Savings Income Fund 100,000 - 100,000 100,000 - 100,000
Al-Ameen Islamic Sovereign Fund 350,000 - 350,000 350,000 - 350,000
Al-Ameen Islamic Retirement Savings Fund 90,000 - 90,000 90,000 - 90,000
UBL Retirement Savings Fund 90,000 - 90,000 90,000 - 90,000
UBL Principal Protected Fund - I - - - 100,000 - 100,000
UBL Principal Protected Fund - II 100,000 - 100,000 100,000 - 100,000
UBL Principal Protected Fund - III 200,000 - 200,000 - - -
UBL Government Securities Fund 1,100,000 - 1,100,000 100,000 - 100,000
Al-Ameen Islamic Cash Fund 100,000 - 100,000 100,000 - 100,000
UBL Gold Fund 100,000 - 100,000 100,000 - 100,000
Al-Ameen Islamic Principal Preservation Fund I 100,000 - 100,000 100,000 - 100,000
Al-Ameen Islamic Principal Preservation Fund II 100,000 - 100,000 100,000 - 100,000
UBL Asset Allocation Fund 600,000 - 600,000 600,000 - 600,000
Al-Ameen Islamic Asset Allocation Fund 100,000 - 100,000 100,000 - 100,000
UBL Insurers Limited 240,000 - 240,000 240,000 - 240,000
Khushhali Bank Limited 832,485 - 832,485 832,485 - 832,485
Oman United Exchange Company, Muscat 6,981 - 6,981 6,981 - 6,981
DHA Cogen Limited 7.2 - - - - - -
8,774,980 - 8,774,980 6,674,980 - 6,674,980
Subsidiaries
United National Bank Limited 1,482,011 - 1,482,011 1,482,011 - 1,482,011
UBL (Switzerland) AG 589,837 - 589,837 589,837 - 589,837
UBL Fund Managers Limited 100,000 - 100,000 100,000 - 100,000
UBL Bank (Tanzania) Limited 1,322,014 - 1,322,014 1,322,014 - 1,322,014
United Executors and Trustees Company Ltd. 30,100 - 30,100 30,100 - 30,100
3,523,962 - 3,523,962 3,523,962 - 3,523,962
462,591,802 17,418,144 480,009,946 409,877,164 12,054,264 421,931,428
Provision for diminution in value of
investments (1,422,574) - (1,422,574) (1,476,109) - (1,476,109)
Investments (net of provisions) 461,169,228 17,418,144 478,587,372 408,401,055 12,054,264 420,455,319
Surplus / (deficit) on revaluation of available for sale
securities 4,898,339 381,426 5,279,765 3,333,337 (5,016) 3,328,321
Deficit on revaluation of held for trading
securities (46,728) - (46,728) (6,390) - (6,390)
Total investments 466,020,839 17,799,570 483,820,409 411,728,002 12,049,248 423,777,250
7.2
(Audited) (Un-audited)
March 31, 2014 December 31, 2013
----------------------------------------------------------------- (Rupees in '000) -----------------------------------------------------------------
The Bank holds 20.99% of the issued and paid up shares of DHA Cogen Limited which were acquired without any consideration having been paid.
NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2014
Note (Un-audited) (Audited)
March 31,
2014
December 31,
2013
8. ADVANCES
Loans, cash credits, running finances, etc.
In Pakistan 265,043,504 269,527,934
Outside Pakistan 113,554,013 119,212,245
378,597,517 388,740,179
Bills discounted and purchased
Payable in Pakistan 28,961,850 29,857,262
Payable outside Pakistan 15,079,068 18,151,641
44,040,918 48,008,903
Advances - gross 422,638,435 436,749,082
Provision against advances
Specific (43,712,703) (44,096,739)
General 8.2 (1,868,288) (1,838,881)
Advances - net of provision 377,057,444 390,813,462
8.1
Category of Classification
Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total
Other assets especially
mentioned* 120,643 - 120,643 2,499 - 2,499 2,499 - 2,499
Substandard 997,215 136,929 1,134,144 197,117 8,477 205,594 197,117 8,477 205,594
Doubtful 1,844,356 1,782,525 3,626,881 371,365 884,272 1,255,637 371,365 884,272 1,255,637
Loss 39,022,941 7,057,399 46,080,340 36,945,770 5,303,203 42,248,973 36,945,770 5,303,203 42,248,973
41,985,155 8,976,853 50,962,008 37,516,751 6,195,952 43,712,703 37,516,751 6,195,952 43,712,703
Category of Classification
Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total
Other assets especially
mentioned* 100,063 - 100,063 640 - 640 640 - 640
Substandard 1,876,334 1,622,940 3,499,274 310,902 406,299 717,201 310,902 406,299 717,201
Doubtful 1,526,948 1,860,661 3,387,609 206,431 1,345,232 1,551,663 206,431 1,345,232 1,551,663
Loss 39,374,606 6,268,507 45,643,113 37,250,604 4,576,631 41,827,235 37,250,604 4,576,631 41,827,235
42,877,951 9,752,108 52,630,059 37,768,577 6,328,162 44,096,739 37,768,577 6,328,162 44,096,739
* The other assets especially mentioned category pertains to agricultural finance and advances to small enterprises.
8.2
8.3
Note (Un-audited) (Audited)
March 31,
2014
December 31,
2013
9. OPERATING FIXED ASSETS
Capital work-in-progress 2,135,105 1,916,346
Property and equipment 20,857,130 21,370,720
Intangible assets 1,225,355 1,320,871
9.1 24,217,590 24,607,937
9.1
-------------(Rupees in '000)------------
Provision held Provision required
----------------------------------------------------------------------------------------- (Rupees in '000) -----------------------------------------------------------------------------------------
Advances include Rs. 50,962 million (December 31, 2013: Rs.52,630 million) which have been placed under non-performing status as detailed below:
March 31, 2014 (Un-audited)
Classified advances
-------------(Rupees in '000)------------
Additions and disposals during the period amounted to Rs. 436.450 million (March 31, 2013: Rs. 693.730 million) and Rs. 441.664 million (March 31, 2013: Rs. 81.709
million), respectively.
December 31, 2013 (Audited)
Classified advances Provision required Provision held
The Bank has availed the benefit of Forced Sale Value (FSV) of mortgaged properties held as collateral against non-performing advances as allowed under BSD Circular 1 of
2011. Had the benefit under the said circular not been taken by the Bank, the specific provision against non-performing advances would have been higher by Rs.1,324.370
million (December 31, 2013: Rs.1,354.730 million). The FSV benefit availed is not available for the distribution of cash or stock dividend to shareholders.
----------------------------------------------------------------------------------------- (Rupees in '000) -----------------------------------------------------------------------------------------
General provision represents provision amounting to Rs. 251.869 million (December 31, 2013: Rs.252.592 million) against consumer finance portfolio and Rs. 42.942 million
(December 31, 2013: Rs. 32.942 million) against advances to small enterprises as required by the Prudential Regulations issued by the SBP and Rs.1,525.477 million
(December 31, 2013: Rs.1,505.347 million) pertaining to overseas advances to meet the requirements of the regulatory authorities of the respective countries in which the
overseas branches operate. General provisions also include an amount of Rs. 48.000 million (December 31, 2013: Rs. 48.000 million) which the Bank carries as a matter of
prudence given the current economic environment, and is based on management estimates.
NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2014
(Un-audited) (Audited)
March 31,
2014
December 31,
2013
10. BORROWINGS
Secured
Borrowings from the State Bank of Pakistan under:
Export refinance scheme 11,486,105 10,835,330
Refinance facility for modernization of SME 37,244 40,795
Long term financing facility 6,242,276 5,950,207
Long term financing under export oriented projects 366,177 423,958
18,131,802 17,250,290
Repurchase agreement borrowings 17,472,830 12,042,846
35,604,632 29,293,136
Unsecured
Call borrowings 2,233,874 5,033,830
Overdrawn nostro accounts 427,105 456,008
Other borrowings 5,327,977 5,790,900
7,988,956 11,280,738
43,593,588 40,573,874
11. DEPOSITS AND OTHER ACCOUNTS
Customers
Fixed deposits 231,223,824 231,663,187
Savings deposits 292,370,952 278,705,006
Sundry deposits 9,277,107 7,083,484
Margin deposits 5,210,278 5,448,770
Current accounts - remunerative 12,763,094 10,493,768
Current accounts - non-remunerative 283,343,982 278,364,577
834,189,237 811,758,792
Financial Institutions
Remunerative deposits 8,756,159 11,692,591
Non-remunerative deposits 3,734,610 4,396,355
12,490,769 16,088,946
846,680,006 827,847,738
(Un-audited) (Audited)
Note
March 31,
2014
December 31,
2013
12. SURPLUS ON REVALUATION OF ASSETS - NET OF DEFERRED TAX
Surplus arising on revaluation of assets - net of tax:
Fixed assets 12.1 10,175,921 10,193,035
Securities 12.2 3,431,847 2,163,409
13,607,768 12,356,444
12.1 Surplus on revaluation of fixed assets
Surplus on revaluation of fixed assets as at January 1 15,227,721 15,330,037
Exchange adjustments (773) 912
Transferred to unappropriated profit in respect of incremental
depreciation charged during the period / year - net of deferred tax (16,612) (67,098)
Related deferred tax liability on incremental depreciation charged
during the period / year (8,945) (36,130)
(26,330) (102,316)
15,201,391 15,227,721
Less: Related deferred tax liability on:
Revaluation as at January 1 5,034,686 5,070,497
Exchange adjustments (271) 319
Incremental depreciation charged during the period / year (8,945) (36,130)
5,025,470 5,034,686
10,175,921 10,193,035
-------------(Rupees in '000)-------------
-------------(Rupees in '000)-------------
NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2014
(Un-audited) (Audited)
March 31,
2014
December 31,
2013
12.2 Surplus / (deficit) on revaluation of available for sale securities
Market Treasury Bills (34,286) (147,850)
Pakistan Investment Bonds 1,089,629 (402,073)
Listed shares 2,131,503 2,767,273
Term Finance Certificates, Sukuks, other bonds, etc. 150,201 75,680
Foreign bonds 1,942,718 1,035,291
5,279,765 3,328,321
Related deferred tax liability (1,847,918) (1,164,912)
3,431,847 2,163,409
13. CONTINGENCIES AND COMMITMENTS
13.1 Direct credit substitutes
Contingent liabilities in respect of guarantees given favouring:
Government 3,846,315 3,796,673
Banking companies and other financial institutions 2,182,803 2,540,111
Others 4,349,484 3,872,302
10,378,602 10,209,086
13.2 Transaction-related contingent liabilities
Contingent liabilities in respect of performance bonds,
bid bonds, warranties, etc. given favouring:
Government 75,822,324 79,772,016
Banking companies and other financial institutions 8,625,445 5,364,806
Others 33,471,150 34,406,478
117,918,919 119,543,300
13.3 Trade-related contingent liabilities
Contingent liabilities in respect of letters of credit opened favouring:
Government 55,676,156 59,515,538
Others 96,309,072 108,446,502
151,985,228 167,962,040
13.4 Other contingencies
Claims against the Bank not acknowledged as debts 12,390,928 12,464,289
13.5 Commitments to extent credit
Note (Un-audited) (Audited)
March 31,
2014
December 31,
2013
13.6 Commitments in respect of forward foreign exchange contracts
Purchase 179,036,665 207,539,873
Sale 156,682,958 172,499,461
13.7 Commitments in respect of derivatives
Forward purchase of Government securities 65,461 -
Interest rate swaps 5,298,593 5,723,576
Cross currency swaps 10,769,240 10,550,240
13.8 Commitments in respect of capital expenditure 1,440,265 1,699,696
13.9 For contingencies relating to taxation refer note 17
-------------(Rupees in '000)-------------
The Bank makes commitments to extend credit in the normal course of its business but these being revocable
commitments do not attract any significant penalty or expense if the facility is unilaterally withdrawn.
-------------(Rupees in '000)-------------
NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2014
March 31, 2014 March 31, 2013
14. MARK-UP / RETURN / INTEREST EARNED
On loans and advances to customers 8,093,263 7,875,150
On lendings to financial institutions
Call money lendings 4,369 511
Repurchase agreement lendings 465,521 52,457
Other lendings to financial institutions 99,277 88,721
569,167 141,689
On investments in
Held for trading securities 534,761 137,205
Available for sale securities 7,022,108 5,786,610
Held to maturity securities 3,139,699 3,035,094
10,696,568 8,958,909
On deposits with financial institutions 35,033 30,130
19,394,031 17,005,878
15. MARK-UP / RETURN / INTEREST EXPENSED
On deposits 8,235,679 6,474,977
On securities sold under repurchase agreements 653,925 859,425
On other short term borrowings 541,575 557,678
On long term borrowings 149,021 326,034
9,580,200 8,218,114
16. ADMINISTRATIVE EXPENSES
Salaries, allowances etc. 2,458,068 2,325,199
Charge for compensated absences 100,950 81,516
Medical expenses 125,204 116,987
Contribution to defined contribution plan 48,322 44,191
Charge in respect of defined benefit obligations 89,979 34,023
Rent, taxes, insurance, electricity etc. 874,716 830,797
Depreciation 400,544 399,230
Amortization 99,562 102,983
Outsourced service charges including sales commission 856,498 669,013
Communications 262,013 257,770
Banking service charges 207,539 189,879
Cash transportation charges 122,668 108,204
Stationery and printing 130,281 121,500
Legal and professional charges 52,474 59,598
Advertisement and publicity 120,244 103,518
Repairs and maintenance 286,911 274,049
Travelling 53,644 52,494
Office running expenses 120,192 115,286
Vehicle expenses 48,667 45,766
Entertainment 43,349 41,213
Cartage, freight and conveyance 19,938 20,720
Insurance expense 25,422 29,679
Auditors' remuneration 22,693 15,850
Training and seminars 15,434 27,344
Brokerage expenses 12,293 13,515
Subscriptions 14,782 17,005
Donations 21,100 15,980
Non-executive Directors' fees 5,066 5,513
Zakat paid by overseas branch 25,473 23,671
Miscellaneous expenses 56,267 52,139
6,720,293 6,194,632
-------------(Rupees in '000)-------------
NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2014
17. TAXATION
18. SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES
Total income 44,733 3,910,028 7,960,705 2,177,694 794,458 -
Total expenses (20,027) (214,504) (4,894,062) (1,565,526) (381,484) -
Profit before tax 24,706 3,695,524 3,066,643 612,168 412,974 -
Segment return on assets (ROA) 18.0% 1.8% 1.1% 0.4% - -
Segment cost of funds 2.1% 6.3% 4.1% 6.1% - -
Total income 33,000 3,226,826 7,130,011 1,792,197 460,303 -
Total expenses (46,478) (231,848) (5,408,638) (661,639) (439,533) -
Profit before tax (13,478) 2,994,978 1,721,373 1,130,558 20,770 -
Segment return on assets (ROA) -4.5% 1.9% 0.7% 0.8% - -
Segment cost of funds 1.0% 6.4% 3.6% 6.8% - -
Segment assets (gross of NPL provisions) 734,686 559,753,737 776,059,462 382,022,437 105,471,701 (749,551,301)
Segment non performing loans (NPLs) 642,582 2,048,342 22,074,061 25,996,913 200,110 -
Segment provision held against NPLs 457,507 1,701,978 19,121,409 22,371,311 60,500 -
Segment liabilities 261,120 551,783,398 754,975,446 359,253,216 14,024,732 (749,551,301)
Segment assets (gross of NPL provisions) 871,272 505,618,254 778,669,287 386,731,271 91,234,812 (709,267,452)
Segment non performing loans (NPLs) 686,875 2,065,568 22,850,714 26,826,792 200,110 -
Segment provision held against NPLs 489,059 1,708,033 19,996,508 21,842,639 60,500 -
Segment liabilities 254,094 492,653,835 754,299,614 361,127,444 9,779,173 (709,267,452)
Segment assets and liabilities include inter segment balances.
Transactions between reportable segments are based on an appropriate transfer pricing mechanism using agreed rates.
------------------------------------------------------------- (Rupees in '000) -----------------------------------------------------------------
Trading and
sales
The Income Tax returns of the Bank have been filed up to the tax year 2013 (accounting year ended December 31, 2012) and were deemed to be assessed under section
120 of the Income Tax Ordinance, 2001 (Ordinance) unless amended by the Commissioner of Inland Revenue.
The income tax authorities have issued amended assessment orders for the tax years 2003 to 2013, and created additional tax demands of Rs.9,589 million, which have
been fully paid as required under the law. The Bank has filed appeals before the various appellate forums against these amendments. Where the appellate authorities have
allowed relief on certain issues, the assessing authorities have filed appeals before higher appellate forums. Where the appellate authorities have not allowed relief the
Bank has filed appeals before higher appellate forums. The management of the Bank is confident that the appeals will be decided in favor of the Bank.
Under the Seventh Schedule to the Ordinance, banks are allowed to claim provisions against advances up to 5% of total advances for consumer and small and medium
enterprises and up to 1% of total advances for remaining advances. Amounts above these limits are allowed to be claimed in future years. The Bank has booked a
deferred tax asset of Rs. 2,365 million (December 31, 2013: Rs. 2,365 million) in respect of provisions in excess of the above mentioned limits.
The Bank also carries a tax asset amounting to Rs. 4,114 million (December 31, 2013: Rs. 4,114 million), representing disallowance of provisions against advances and off
balance sheet obligations, for the periods prior to the applicability of the Seventh Schedule. The management, in consultation with its tax advisor, is confident that these
would be allowed to the Bank at appellate levels.
The tax returns for Azad Kashmir (AK) Branches have been filed upto the tax year 2013 under the provisions of section 120(1) read with section 114 of the Ordinance and
in compliance with the terms of the agreement between banks and the Azad Kashmir Council in May 2005. The returns filed are considered as deemed assessment orders
under the law.
The tax returns for UAE have been filed upto the year ended December 31, 2013 and for other overseas branches upto the year ended December 31, 2012 under the
provisions of the laws prevailing in the respective countries, and are deemed as assessed unless opened for reassessment.
For the three months ended March 31, 2014 (Un-audited)
------------------------------------------------------------- (Rupees in '000) -----------------------------------------------------------------
------------------------------------------------------------- (Rupees in '000) -----------------------------------------------------------------
------------------------------------------------------------- (Rupees in '000) -----------------------------------------------------------------
Inter segment
elimination
Commercial
banking
Retail banking Others
As at March 31, 2014 ( Un-audited)
Corporate
finance
Corporate
finance
Others
Inter segment
elimination
For the three months ended March 31, 2013 (Un-audited)
Inter segment
elimination
Commercial
banking
Trading and
sales
Others
Corporate
finance
Retail banking
Corporate
finance
Commercial
banking
Retail banking
Trading and
sales
Others
Trading and
sales
Commercial
banking
Retail banking
As at December 31, 2013 (Audited)
Inter segment
elimination
NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2014
19. RELATED PARTY TRANSACTIONS
The Bank has related party transactions with its associates, subsidiary companies, employee benefit plans and its directors and executive officers (including their associates).
Details of transactions with related parties during the period, other than those which have been disclosed elsewhere in these unconsolidated condensed interim financial statements, are as follows:
Directors
Key manage-
ment
personnel
Subsidiaries Associates
Other related
parties
Directors
Key manage-
ment
personnel
Subsidiaries Associates
Other related
parties
Balances with banks
In current accounts - - 1,507,556 - - - - 1,130,454 - -
In deposit accounts - - 1,458,608 - - - - 979,576 - -
- - 2,966,164 - - - - 2,110,030 - -
Lendings to financial institutions
Other lendings to financial institution - - 732,409 - - - - 349,374 - -
Investments
Opening balance - - 3,523,962 6,674,980 4,075,691 - - 3,523,962 12,047,596 487,775
Investment made during the period / year - - - 2,200,000 - - - - 1,100,000 971,319
Investment redeemed / disposed off during the period / year - - - (100,000) (61,896) - - - (6,472,616) (491,881)
Transfer in / (out) - net - - - - - - - - - 3,108,478
Closing balance - - 3,523,962 8,774,980 4,013,795 - - 3,523,962 6,674,980 4,075,691
Provision for diminution in value of investments - - - - 116,548 - - - - 116,548
Advances
Opening balance - 105,328 - 2,155,149 412,954 - 124,163 - - 11,913,710
Addition during the period / year - 23,842 - - 4,660 - 72,108 - - 9,707,517
Repaid during the period / year - (14,795) - - (133,529) - (90,943) - - (21,208,273)
Transfer in / (out) - net - (103) - - - - - - 2,155,149 -
Closing balance - 114,272 - 2,155,149 284,085 - 105,328 - 2,155,149 412,954
Provision held against advances - - - 2,155,149 - - - - 2,155,149 -
Other Assets
Interest mark-up accrued - 301 8,004 - 8,922 - 30 4,695 - 145,551
Receivable from staff retirement funds - - - - 241,593 - - - - 58,964
Prepaid insurance - - - 241,122 - - - - - -
Dividend Receivable - - - 1,438 229,076 - - - 1,201 -
Other receivable - - 4,320 - 30,164 - - 4,240 - 30,164
Provision against other assets - - - - 30,164 - - - - 30,164
Borrowings
Opening balance - - 1,008,108 - - - - - - 306,215
Borrowings during the period / year - - 1,327,160 - - - - 1,737,858 2,155,493 16,356,760
Settled during the period / year - - (1,055,378) - - - - (729,750) (2,155,493) (16,662,975)
Closing balance - - 1,279,890 - - - - 1,008,108 - -
Overdrawn nostros - - - - - - - 56,424 - -
Deposits and other accounts
Opening balance 7,506,473 124,455 277,343 665,956 81,859 6,173,963 98,008 142,656 819,332 1,913,538
Received during the period / year 2,537,857 303,034 38,926,810 18,851,379 26,463,369 22,861,734 980,912 171,477,272 67,507,686 201,691,134
Withdrawn during the period / year (4,000,583) (239,849) (38,744,111) (19,012,037) (26,460,489) (21,522,949) (954,465) (171,342,585) (67,661,062) (202,918,770)
Transfer in / (out) - net 8,115 (2,136) - - - (6,275) - - - (604,043)
Closing balance 6,051,862 185,504 460,042 505,298 84,739 7,506,473 124,455 277,343 665,956 81,859
Other Liabilities
Interest / return / mark-up payable on deposits 63,963 169 55 - 106 32,260 1,097 78 - 709
Interest / return / mark-up payable on borrowings - - 17 - - - - 4,574 - -
Payable to staff retirement fund - - - - 16,179 - - - - 152,441
Unearned income - - - - - - - 187 - -
Contingencies and Commitments
Letter of guarantee - - - 73,015 - - - - 78,051 -
Forward foreign exchange contracts purchase - - 3,300,745 - - - - 3,633,699 - -
Forward foreign exchange contracts sale - - 3,345,311 - - - - 3,710,543 - -
Directors
Key manage-
ment
personnel
Subsidiaries Associates
Other related
parties
Directors
Key manage-
ment
personnel
Subsidiaries Associates
Other related
parties
Mark-up / return / interest earned - 1,448 7,378 - 8,939 - 1,743 8,084 - 13,395
Commission / charges recovered 7 7 155 546 17 5 9 67 3,383 198
Dividend income - - - 19,195 250,856 - - - 6,005 -
Net gain / (loss) on sale of securities - - - 66,931 5 - - - - (197)
Other income - 166 187 88 - - - 263 - -
Mark-up / return / interest paid 46,513 1,594 7,196 9,575 5,626 28,492 515 12,618 6,244 7,372
Remuneration paid - 338,776 - - - - 309,026 - - -
Post employment benefits - 3,731 - - - - 3,970 - - -
Non-executive directors' fee 5,066 - - - - 5,513 - - - -
Net charge for defined contribution plans - - - - 48,322 - - - - 44,191
Net charge / (reversal) for defined benefit plans - - - - 26,794 - - - - (19,499)
Insurance premium paid - - - 261,758 - - - - 258,277 -
Insurance claims settled - - - 31,786 - - - - 32,909 -
Other expenses - - - 15,319 24,432 - - - - 18,589
---------------------------------------------------------------------------------(Rupees in '000) ----------------------------------------------------------------------------------
The Bank enters into transactions with related parties in the normal course of business. Contributions to and accruals in respect of staff retirement benefits and other benefit plans are made in accordance with the actuarial valuations
/ terms of the contribution plan. Remuneration to the executives / officers is determined in accordance with the terms of their appointment.
As at March 31, 2014 (Un-audited) As at December 31, 2013 (Audited)
---------------------------------------------------------------------------------(Rupees in '000) ----------------------------------------------------------------------------------
For the three months ended March 31, 2014 (Un-audited) For the three months ended March 31, 2013 (Un-audited)
NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2014
20. ISLAMIC BANKING BUSINESS
20.1 The statement of financial position of the Bank's Islamic Banking branches as at March 31, 2014 is as follows:
Note (Un-audited) (Audited)
ASSETS
Cash and balances with treasury banks 818,136 951,157
Balances with other banks 1,061,848 1,701,743
Investments 6,092,803 7,363,524
Islamic financing and related assets 20.3 2,754,917 5,183,080
Operating fixed assets 113,115 117,974
Due from Head Office 3,429,979 2,144,911
Other assets 160,347 153,963
Total Assets 14,431,145 17,616,352
LIABILITIES
Bills payable 124,970 54,532
Deposits and other accounts
Current accounts 2,081,595 2,328,416
Saving accounts 2,344,343 2,490,262
Term deposits 1,591,891 1,994,823
Deposits from financial institutions - remunerative 7,549,169 9,980,829
13,566,998 16,794,330
Other liabilities 125,787 191,564
13,817,755 17,040,426
NET ASSETS 613,390 575,926
REPRESENTED BY
Islamic Banking Fund 681,000 681,000
Accumulated losses (182,051) (156,679)
498,949 524,321
Surplus on revaluation of assets 114,441 51,605
613,390 575,926
20.2
Return earned 330,138 331,472
Return expensed (244,307) (206,885)
85,831 124,587
Provision against loans and advances - net (1,613) -
Reversal for diminution in value of investments - net 360 240
(Provision) / reversal against assets given on Ijarah (482) 2,826
(1,735) 3,066
Net return after provisions 84,096 127,653
Other Income
Fee, commission and brokerage income 4,565 3,288
Dividend income 3,164 6,005
Income from dealing in foreign currencies (7,303) 307
Other income 28,578 1,820
Total other income 29,004 11,420
113,100 139,073
Other Expenses
Administrative expenses (138,845) (155,319)
Other reversals / (provisions) - net 373 -
Total other expenses (138,472) (155,319)
Net loss for the period (25,372) (16,246)
Accumulated losses brought forward (156,679) (194,579)
Accumulated losses carried forward (182,051) (210,825)
Remuneration to Shariah Advisor 308 285
(Un-audited) (Audited)
20.3 Islamic financing and related assets
Financing
Murabaha 1,265,117 3,232,150
Ijarah 592,875 867,257
Diminishing Musharaka 728,424 687,448
Salam 72,402 281,040
Provision against financing (33,002) (31,389)
2,625,816 5,036,506
Advances
Advances and receivables against Ijarah 124,451 143,753
Advances for Murabaha 18,810 17,498
Provision against advances for Murabaha (17,498) (17,498)
125,763 143,753
Profit receivable against financing 3,338 2,821
2,754,917 5,183,080
------------ (Rupees in '000) ------------
March 31, 2013
------------ (Rupees in '000) ------------
March 31,
2014
December 31,
2013
The profit and loss account of the Bank's Islamic Banking branches for the three months ended March 31, 2014 is as follows:
------------ (Rupees in '000) ------------
-------(Un-audited)------
March 31, 2014
March 31,
2014
December 31,
2013
NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2014
21 NON-ADJUSTING EVENT AFTER THE BALANCE SHEET DATE
22. DATE OF AUTHORIZATION
Atif R. Bokhari Amin Uddin Seerat Asghar Sir Mohammed Anwar Pervez, OBE, HPk
President & Director Director Chairman
Chief Executive Officer
The Board of Directors in its meeting held on April 18, 2014 has declared a cash dividend in respect of the three months
ended March 31, 2014 of Rs.2.5 per share (March 31, 2013: Rs.2.0 per share). The unconsolidated condensed interim
financial statements for the three months ended March 31, 2014 do not include the effect of these appropriations which
will be accounted for subsequent to the period end.
These unconsolidated condensed interim financial statements were authorised for issue on April 18, 2014 by the Board
of Directors of the Bank.